Correlation Between Il2m International and Bakken Water

Can any of the company-specific risk be diversified away by investing in both Il2m International and Bakken Water at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Il2m International and Bakken Water into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Il2m International Corp and Bakken Water Transfer, you can compare the effects of market volatilities on Il2m International and Bakken Water and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Il2m International with a short position of Bakken Water. Check out your portfolio center. Please also check ongoing floating volatility patterns of Il2m International and Bakken Water.

Diversification Opportunities for Il2m International and Bakken Water

-0.49

Correlation Coefficient

Il2m International  Bakken Water

Very good diversification

The 3 months correlation between Il2m and Bakken is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Il2m International Corp and Bakken Water Transfer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bakken Water Transfer and Il2m International is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Il2m International Corp are associated (or correlated) with Bakken Water. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bakken Water Transfer has no effect on the direction of Il2m International i.e., Il2m International and Bakken Water go up and down completely randomly.

Pair Corralation between Il2m International and Bakken Water

Given the investment horizon of 90 days Il2m International is expected to generate 9.98 times less return on investment than Bakken Water. But when comparing it to its historical volatility, Il2m International Corp is 1.91 times less risky than Bakken Water. It trades about 0.03 of its potential returns per unit of risk. Bakken Water Transfer is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  1.80  in Bakken Water Transfer on September 16, 2024 and sell it today you would earn a total of  4.20  from holding Bakken Water Transfer or generate 233.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.48%
Values	Daily Returns

Il2m International Corp  vs.  Bakken Water Transfer

Il2m International Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Il2m International Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very weak forward indicators, Il2m International displayed solid returns over the last few months and may actually be approaching a breakup point.

Bakken Water Transfer

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bakken Water Transfer are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Bakken Water showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Il2m International and Bakken Water

The main advantage of trading using opposite Il2m International and Bakken Water positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Il2m International position performs unexpectedly, Bakken Water can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Bakken Water will offset losses from the drop in Bakken Water's long position.

The idea behind Il2m International Corp and Bakken Water Transfer pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.